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Our briefing for Tuesday July 7, 2020:
Jul 7, 2020 3:12:58 PM
- Jair Bolsonaro, the President of Brazil has tested positive for the coronavirus. With Brazil only trailing the United States for most coronavirus cases, President Bolsonaro has downplayed the seriousness of the pandemic since it started, referring to it as nothing more than just a little flu. Speaking at a news conference on Tuesday, President Bolsonaro was his usual defiant self: “The number of deaths has increased not because of the virus but because of the fear of the virus. The virus is like the rain, it will hit you.” President Bolsonaro concluded his speech by taking off his mask and giving a thumbs up. The Brazilian President started feeling weak on Sunday after celebrating the 4th of July American holiday with the US ambassador and other top ministers before developing more symptoms on Monday such as tiredness, muscle pain and a fever of 38 degrees.
- In the United States, the White House will turn their focus to reopening the country’s schools. While the reopening decision will be left to state and local governments, United States President Donald Trump’s administration will provide financial resources and share best practices and is strongly urging for students to return to class in the fall. President Trump, along with the first lady were to appear at an event centered around the reopening of schools on Tuesday.
- In Canada, as of Tuesday, it is now mandatory to wear face masks while inside enclosed public spaces in the country’s most populous city. People in Toronto will now be required to wear a mask on public transportation, inside shops, grocery stores and malls. The mask policy will not apply to most workplaces where physical distancing is possible.
- The United Kingdom’s senior scientists are urging Britons to embrace wearing face coverings while out in public. A Financial Times article notes that UK residents are well behind the United States and other countries when it comes to wearing facial coverings. Only 25% of Britons are wearing masks in public compared to 66% in the United States and 83% in Italy. The Royal Society, Britain’s national academy of sciences issued two separate reports that emphasized the benefits of wearing facial coverings for reducing the risk of infection for both the wearer and people around them.
- Sweden’s daily COVID-19 total has fallen to its lowest levels since late May. The country drew worldwide attention for their lax social distancing rules early on and with expanded testing last month, saw their cases skyrocket. The country’s health agency director attributes the decline in numbers to residents voluntarily adhering to social distancing guidelines.
- The World Health Organization (WHO) will be sending its experts to China this weekend. The aim of the trip is to work with their Chinese counterparts to identify the animal origin of COVID-19 and how exactly the disease jumped from animals to humans.
- Australia has reimposed lockdown measures for the entire city of Melbourne. The decision to lockdown the city of 4.9 million people was made just hours before the border between New South Wales and Victoria was to shutdown for the first time in a century. Starting at midnight on Wednesday, everyone in Melbourne will be required to stay home unless travelling to work, studying, shopping for food, or attending medical appointments. Restaurants, cafes and bars will provide takeout service only. The lockdown measure is expected to be in place for the next six weeks.
Covid-19 – Due Diligence And Asset Management
Lansdowne to Shut Main Hedge Fund in Retreat From Shorting
Brief: Lansdowne Partners is shutting its main hedge fund in a shift away from short-selling after being hit by some of its worst-ever losses. The London-based investment firm is closing the $2.8 billion Lansdowne Developed Markets Fund, according to a letter to investors seen by Bloomberg. Clients can withdraw their money or move it into the Lansdowne Developed Markets Long Only Fund or a new LDM Opportunities Fund, which will invest in early-stage companies. The firm will continue to bet against companies in some of its other funds. A spokesman for Lansdowne Partners declined to comment. The move marks a dramatic retreat by one of the world’s most famous equity long/short hedge funds, and comes after poor performance in both rising and falling markets. The firm’s main hedge fund is run by Peter Davies and Jonathon Regis and tumbled 13% in March’s rout, the biggest monthly decline since it started trading almost two decades ago. It was down 23.3% in the first half of the year, according to another letter to investors. Years of poor returns have led to outflows from the firm, with its assets dropping to $9.8 billion in June from a peak of nearly $22 billion in 2015.
Hedge Fund Sloane Robinson to Shut After More Than 25 Years
Brief: Sloane Robinson is closing as it struggles to raise enough capital, joining a string of high-profile hedge funds to shutter in recent years. The firm, which began investing in 1994, will shut at the end of 2020 and wind down its Global Opportunities and Global Compounder portfolios, according to a letter to investors seen by Bloomberg. David Gale, chief executive officer of the London-based investment firm, declined to comment beyond the letter. “Despite strong investment performance amidst difficult market conditions, we have not succeeded in acquiring the required assets to support this franchise and the partnership remains dependent on revenue from the legacy funds of the founding partners,” the firm told investors in the letter dated Monday. Sloane Robinson, which was founded by Hugh Sloane and George Robinson and specializes in emerging and Asian markets equities trading, managed more than $10 billion at its peak prior to the 2008 financial crisis, but assets dropped sharply in recent years. In 2012, the firm restructured its business and investment-management team. It’s the latest victim of a tough money-raising environment by hedge funds. For much of the past decade, investors have revolted over high fees and lackluster returns. Clients have pulled more than $130 billion since the start of last year, according to data compiled by eVestment, and hedge fund liquidations in the first quarter jumped to the highest level in more than four years.
Some Private Equity Firms See Early Signs of a Deal Thaw
Brief: Private equity investors and bankers say they have seen deal activity start to slowly pick up in recent weeks after the coronavirus pandemic virtually stalled activity for more than three months. “There is a tangible change in the market sentiment,” said Daniel Connolly, managing director and co-head of mergers and acquisitions at William Blair & Co. “Most think there is an opportunistic window between now and the elections to buy and sell quality assets.” Investors are pushing deals closer to the finish line partly by modifying due diligence processes, pitching deals to only a limited number of reliable prospective buyers and buying minority stakes rather than control positions, several investment bankers, general partners and investment advisers told PEN sister titleWSJ Pro Private Equity. Some investors predict that deal activity will be buoyed as more firms report second quarter results, which will more accurately reflect the impact of the economic downturn. “That will help price the deals,” Connolly said. Michael Butler, chairman and chief executive of Seattle-based mid-market investment bank Cascadia Capital, said that buyers and sellers are reviewing deals in health care, technology, food and agricultural products, business services and some industrial sectors.
The Asset Managers Approved for PPP Money
Brief: A hedge fund said to be closing up shop, a former fund manager’s family office, and a venture capital fund launched in 2015 are among the thousands of businesses listed as recipients of loans through the federal government’s Paycheck Protection Program. On Monday, the Small Business Administration made public a list of the more than 660,000 companies that received a loan larger than $150,000 through the program, which is intended to help businesses keep people employed during the coronavirus pandemic. If a company meets certain eligibility standards, part, or all, of the loan will be forgiven. The loans also carry a one percent interest rate, according to theSBA’s website. Some firms listed in the SBA’s data have called its accuracy into question, however. Electric scooter company Bird shared on Twitter that it was “erroneously” listed among loan recipients. According to Bird, the firm neither applied for nor received a PPP loan. One firm contacted byInstitutional Investor for this story experienced a similar issue: its CEO said via email Monday that the firm did not receive a PPP loan, despite being listed in the data. And three other firms listed in an earlier version of the story that did not respond to a request for comment or could not be reached for comment subsequently responded to say that they, too, had been listed in error.
Brevan Howard Back-to-Back Monthly Losses Cut Into Record Gain
Brief: Brevan Howard Asset Management’s flagship macro hedge fund lost 0.6% in June, suffering back-to-back monthly losses and giving up some of its record gains from March. The decline follows a 0.9% loss in the $3.8 billion Brevan Howard Master Fund in May, according to letters to investors seen by Bloomberg. Preliminary estimates from Eurekahedge show that macro hedge fund peers made money, on average, in both months. A spokesman for the Jersey-based investment firm declined to comment on the performance. Macro hedge funds, which bet on economic trends, have generally bounced back this year amid coronavirus-induced market volatility. Traders have been able to exploit big swings in bond and currency markets to make money. Brevan’s decline still puts its flagship fund up 21.3% in the first half of the year, according to one of the letters. If that return is maintained for the full year, it would beat all bar one annual return since the fund was launched in 2003. The firm, co-founded by billionaire Alan Howard, is rebounding from years of mediocre performance in its macro hedge fund. The master fund surged by 18.3% during the market turmoil in March, its best monthly gain, driven by interest rate trading across directional, volatility and relative value strategies in a range of different markets.
Troubled Firm Marto Capital Asked for PPP Money – and Got Approved, Records Show
Brief: Marto Capital — aformer wunderkindfounded by an ex-Bridgewater Associates star — got approved for emergency funds from the U.S. government, records showed Monday. Katina Stefanova’s New York City-based firm would have received between $150,000 and $350,000 in potentially forgivable loans under the Paycheck Protection Program, which aims to help save small businesses hurt by the coronavirus pandemic. Marto did not confirm or comment on the loan.Notably, Marto retained zero jobs with the funds, according to the released data. Signature Bank approved its application April 28, per the official records.But it’s not clear what Marto Capital’s business actually is, or if it plans to repay any money received. Martogave upits active status with the industry’s main U.S. regulatory bodies. On its website, the company calls itself a “new age investment company.” Founded as a hedge fund firm in 2015, Marto attracted hundreds of millions in capital from brand-name seeding firms including PAAMCO Prisma. Stefanova became a sparkling face in the investment industry, running what many saw as a spin-out from one of the world’s most successful hedge funds, Bridgewater.
